Brazilian Real: Politics weighs but carry supports – ING
ING’s Chris Turner reports the Brazilian Real (BRL) underperformed in an otherwise supportive carry environment after a bank downgraded Brazilian equities and a new poll showed President Lula widening his lead ahead of October elections.
The Brazilian Real (BRL) underperformed in a supportive carry environment, according to ING analyst Chris Turner. The decline was attributed to a bank downgrading Brazilian equities to neutral from overweight, and a new poll showing President Lula widening his lead ahead of October elections. Turner suggests this marks the first political hit to the BRL, but he expects high implied yields and Brazil's net energy exporter status to maintain demand.
He believes the USD/BRL rate will not break 5.22 on local news alone. The article highlights the importance of the upcoming US Consumer Price Index report and the Middle East crisis in shaping market sentiment.
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